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Government of Sri Lanka's industrialization strategy calls for the
expansion, diversification and upgrading of its industrial base, as
well as promotion of foreign investment in virtually all sectors of
the economy. Under this framework, the Board of Investment of Sri
Lanka (BOI) is responsible for promoting investment in Sri Lanka.
It granted a total of 276 investment approvals up to October 2000.
the 171 agreements signed during that period represented a 4.9 per
cent increase compared to the first 10 months of 1999. the estimated
foreign investment committed by the contracted projects stood at Rs.
14,938 million ($ 192 million), whereas the local investment commitment
amounted to Rs. 25,298 million. these projects have an estimated employment
generating capacity of 35,800 persons.
An Ideal
place for Investors
the business
environment and positive investor friendly policies of the government
offer attractive conditions for investors.
Infrastructure
Private and
public investment programmes have been constantly focused on improving
the country's basic infrastructure facilities, which today rank
as the best available in South Asia.
Business
Climate
Comparisons
have shown that Sri Lanka offers one of the most liberal business
environments in Asia. total foreign ownership is welcome in most
areas of the economy. While there are a few areas where foreign
investment is restricted or limited, these are being minimized.
there are no restrictions on the repatriation of earnings and capital.
the Sri Lankan
government is business-friendly and actively pursuing a policy of
economic liberalization with emphasis on private sector investment.
the private sector plays a vital role in traditional areas of public
investment such as telecommunication, energy and transport. So far,
many government enterprises are in the process of being privatised.
the Location
Advantage
Sri Lanka is
the logical location for manufacturing and service organizations
that wish to establish a presence in what is fast becoming an economic
powerhouse in the region. the island is ideally located as the gateway
to the vast Indian sub-continent, home to a quarter of the world's
population.
In addition,
trade barriers are falling throughout the region. the seven countries,
which comprise the South Asian Association for Regional Cooperation
(SAARC), have resolved to progress towards a South-Asia Free trade
Arrangement (SAFtA) over the next 5 years. In addition, Sri Lanka
has agreed a free trade agreement with India covering 1000 tariff
codes and is negotiating a similar agreement with Pakistan.
Investment
Protection and Guarantees
Sri Lanka has
developed an enviable record of "political credibility" in the international
arena. All major political parties are committed to free enterprise
and individual freedom.
Bilateral investment
agreements, supported by a constitutional guarantee, provide strong
protection to foreign investment in Sri Lanka. Under Article 157
of the country's constitution, investment protection agreements
enjoy the force of law and no legislative, executive nor administrative
action can be taken to contravene it.
Bilateral investment
protection agreements are valid for 10 years. they are extended
automatically unless terminated by either party. If the agreements
are terminated, investments already made are protected for another
10 years. A clause in the Sri Lankan constitution ensures the sanctity
of agreements.
these agreements
provide for the following:
· Protection
against nationalization.
· Prompt and adequate compensation, if required.
· Free remittance of earnings, capital and business fees.
· Settlement of disputes under the International Convention for
the Settlement of Investment Disputes (ICSID)
Bilateral agreements
exist between Sri Lanka and the following countries : Belgium, China,
Denmark, Egypt, Finland, France, Germany, Indonesia, India, Iran,
Italy, Japan, Korea, Luxembourg, Malaysia, Netherlands, Norway,
Romania, Singapore, Sweden, Switzerland, thailand, the United Kingdom
and the United States of America.
Protection
of Intellectual property
the laws relating
to copyright, industrial designs, patents, trade marks, service
marks, trade names and unfair competition are covered by the Code
of Intellectual Property Act of 1978 and subsequent amendments.
Arbitration
An Arbitration
Centre has been established in Colombo for the settlement of commercial
disputes expeditiously, economically and privately. A new law has
already been enacted for this purpose. the Centre will be affiliated
with the Arbitration Institute of the Stockholm Chamber of Commerce
and will follow its standards and norms.
the Arbitration
Act gives recognition to the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards. this means that arbitration
awards made abroad are now enforceable in Sri Lanka. Similarly,
awards made in Sri Lanka can be enforced abroad.
Remittance
of Earnings and Capital
By mid 1994,
Sri Lanka had removed all foreign exchange restrictions on current
account transactions. the monetary authorities are moving towards
further liberalizing exchange controls.
Within this
liberal environment, foreign investors can freely remit dividends,
capital or royalty payment through any commercial bank, as well
as the sale proceeds of shares. (As stated earlier, for qualifying
investments, the BOI is authorized to exempt companies from the
provisions of the Exchange Control Act).
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